AT&T links up pan-European telecoms arms

AT&T and Unisource, an alliance of European telecoms companies, yesterday announced a merger of their continental European telecoms businesses, in the latest sign of rapid consolidation in the liberalising telecommunications market.

The new company, to be called AT&T-Unisource, will have revenues of $1bn (pounds 660m) and a staff of 5,000, and will offer pan-European services, particularly to businesses. Unisource will take a 60 per cent majority stake.

It joins two established alliances, BT's Concert and a joint venture between France Telecom and Deutsche Telekom, formed in advance of the deregulation of telephony in the EU by 1998.

Unisource, owned by the Swiss, Dutch, Swedish and Spanish national telecoms companies, also has the option to take up to a 49.9 per cent stake in AT&T's UK operations within the next year. AT&T already has an operator's licence to offer telecoms services in Britain.

AT&T-Unisource had already established a strategic alliance, Uniworld, to offer both European and international services to businesses. Yesterday's announcement represents a further step in co-operation, executives from the two sides said.

The merger will also simplify the relationship between the operating companies, and provide them with the ability to expand by acquisition in the future. The two have agreed, as well, to jointly fund research and development and to invest in multimedia.

"This is a much expanded joint venture, which will be much more useful to our customers as a whole," a spokesman said. Common network, joint billing and customer service will also be features of the new venture.

Liberalisation of the voice and data markets in the European Union has encouraged a range of telecoms companies to extend their services into different markets. AT&T-Unisource said it would offer wireless, satellite and systems integration services, primarily to big businesses.

The new venture will have two headquarters, in Geneva (for multimedia) and Hoofddorp in the Netherlands (communications services).

The two companies said they have alerted competition authorities in Brussels, which have been looking closely at all telecoms alliances in recent years. The new joint venture will require the European Commission's approval.

Brussels has also been looking at Uniworld, which has yet to be approved, and has so far withheld approval of Telefonica's investment in Unisource.

A spokesman for BT said: "We're very pleased that they are catching up." BT's Concert is seen as being the most developed European alliance.